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Soultrader

Advanced Pivot Point Trading

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Initially used by floor traders, pivot points have become widely popular among the trading public. Pivot points are simple mathematical calculations used to determine support and resistance levels based on the close, high, and low. Depending on a traders preference, one may choose to use the midpoints, weekly, and monthly pivot levels in combination with the daily pivot levels. Pivot points can also be ranked in terms of importance: monthly coming first, weekly second, and the daily pivot in third. Similar to moving averages, the 200 period moving average will act as a stronger support/resistance than the 20 period moving average. This concept can be applied to pivot points as well. The S3 and R3 pivot points are usually a good level to fade since price will usually remain between these two levels. I will use the midpoints for the daily pivot point calculations but not for the weekly and monthly pivots. Here is the formula I use for pivot points:

 

R3 = R2 + RANGE (same as: PP + RANGE * 2)

R2 = PP + RANGE

R1 = (2 * PP) - LOW

PP = (HIGH + LOW + CLOSE) / 3

S1 = (2 * PP) - HIGH

S2 = PP - RANGE

S3 = S2 - RANGE (same as: PP - RANGE * 2)

 

Simply divide the two pivots to find the midpoints. Example: (S1+S2)/2 = midpoint

 

There are some rules when applying midpoints to the daily pivot calculations. In trading the Dow mini-sized futures contract, the distance between the two pivots must be over 40 points when applying the midpoint. The only exception to this rule is when the midpoints line up with the previous day’s high, previous day’s low, weekly pivot, monthly pivot, value low, value high, POC, or an unfilled gap.

By using the midpoints for the daily pivot calculation, you will get 13 set of numbers between S3 and R3. Calculating the weekly and monthly pivots (without midpoints) will give you an additional 14 set of numbers. This will give you a total of 27 price levels.

 

Advanced Pivot Point Analysis

 

My core trading method is based on identifying key price levels using pivot point cluster zones. A cluster zone is an area in which pivot points line up within 10 points of each other. In addition to the daily, weekly, and monthly pivots I will identify the previous day’s high, previous day’s low, previous day’s 50% range, unfilled gap, value low, value high, and POC (point of control). This gives me a total of 33 price levels. What I am looking for is any of these pivots to line up with each other and create a cluster zone.

 

Let’s take a look at the chart posted below. On August 21st, we have the following:

High: 11418

Low: 11342

 

Midpoint between daily pivot and R1: 11413

Daily Pivot: 11389

Value High: 11381

Previous days 50% range: 11365

S1: 11361

Value Low: 11349

Midpoint between S1 and S2: 11339

 

JamesLee.jpg

 

By looking at these few numbers, we are able to come up with 4 key cluster zones. The first zone is the cluster between the high at 11418 and midpoint at 11413. This 5 point range is a cluster zone that will act as key resistance/support. The second zone is the cluster between the daily pivot at 11389 and value high at 11381. I will take the midpoint of these two levels at 11385 to base my trading decision. The third zone is the cluster between the previous days 50% range at 11365 and the S1 pivot at 11361. This area will also act as key resistance/support. The fourth zone is the cluster between the low at 11342 and the midpoint at 11339. This will be a key support zone.

 

Of course you will have trading days when only 1 or 2 cluster zones exist. On these days I look to get into a sniper trading mode, looking for one or two good opportunities and focusing on my entry points. Trading setups using these cluster zones goes beyond the scope of this article. I just want to introduce a different method of pivot point analysis. Learn more about this trading method on my website through multimedia presentations and charts. Good luck and best of trading.

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nice james. i've done a little work with levels. i always found the charts fill up quickly and become unreadable. so sure clusters (confluence) is the way to go! i've attached a spreadsheet i use to do just that.

 

it calculates varies levels:

fib 161.9%

fib 123%

fib 61.8%

floor pivots r3

floor pivot r2

floor pivot r1

wkly fib 161.9%

wkly fib 123%

wkly fib 61.8%

wkly floor pivots r3

wkly floor pivot r2

wkly floor pivot r1

60min pivot range low

Lst.wks.low

y'day low

60min.floor pivots r3

60min.floor pivot r2

60min.floor pivot r1

 

60minLow

wkly pivot range low

dly pivot range low

 

it then cross checks each level with the others using a tolererance/sensitivity. the current sheet contains data for YM dow futures with sensitivity of 5. so if your level is 12678 it will crosscheck everything between 12673 - 12683. if it finds another level who falls inbetween these two numbers it gets a hit. if you 1 or more hits it includes the levels.

 

now you just enter those few lines for the trading day and then you've got some high probability spots from which to trade off or hide stops behind.

 

add more too it or modify it for you own purpuses.

 

cheers, marius (aka mong)

mong levels.xlsFetching info...

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  Quote
add more too it or modify it for you own purpuses.

 

Great tool mong! Turns out it's a pretty good tutorial as well. I see how I can add previous day MP value areas. At a later date I can add developing VA much like you have your 60 min data set up. Then let your spreadsheet check those for confluence. :)

 

P.S. I modified your 1.23% fib to 78.6% which is a level I prefer.

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  btrader2 said:
I see how I can add previous day MP value areas. At a later date I can add developing VA much like you have your 60 min data set up. Then let your spreadsheet check those for confluence. :)

 

And don't forget to add the POC for the Globex session as well.:thumbs up:

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cheers,

this is ust what ive been looking for. In my trades i like to look for confluence and areas of price cluster.

ive been looking to incorporate pivot points into my trading strategy.

just as a general note tho...do u guys trade forex? and if so, what time frame do u find suits best...currently i use 12EST to 12EST coupled with 12GMT to 12GMT.

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Hi mong,

 

I trade T-bonds and if are aware the price format for Bonds is xxx-xxx.

(which would translete to e.g 130 24.0/32).

 

In your spreadsheet how the bonds price format would be accepted and how the calculations would work ?

 

Thank You

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I would like to pose a question to the forum concerning pivot calculation. I would be interested to see what the consensus is for what price is used for the "close". Do most traders tend to use the actual close price or do most use the "settlement" price. This always seems to be a sticking point so will be interesting to see what view points traders on this forum have. Cheers.

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  artrading said:
Still no one giving basic guidance on how to use the spreadsheet...? Think I'm the 3rd person to ask, thanks...

 

I am not sure what you mean ? The guidance is in the post with the attached spreadsheet and is as clear as could possibly be in my view so what more do you want ?

 

 

Paul

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  Trader333 said:
I am not sure what you mean ? The guidance is in the post with the attached spreadsheet and is as clear as could possibly be in my view so what more do you want ?

 

 

Paul

 

I guess if one does not provide clear buy/sell signal rules with something, that this is not enough for some people...

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  sevensa said:
I guess if one does not provide clear buy/sell signal rules with something, that this is not enough for some people...

 

Sorry for obviously being stupid(?) all I wanted to know was which specific cells I change as the spreadsheet is laid out with a 'summary' page but not clearly with a data entry page. I am guessing it is the middle figures between the r/s results but I thought I'd confirm. I.e. am I putting in the last hours high/low/close, yesterdays.. this weeks, last weeks?

 

Come on, give me a break - I'm not looking for a handout, just help in using the thing.

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  artrading said:
Sorry for obviously being stupid(?) all I wanted to know was which specific cells I change as the spreadsheet is laid out with a 'summary' page but not clearly with a data entry page. I am guessing it is the middle figures between the r/s results but I thought I'd confirm. I.e. am I putting in the last hours high/low/close, yesterdays.. this weeks, last weeks?

Come on, give me a break - I'm not looking for a handout, just help in using the thing.

 

 

a few simple pointers for all...

-- ask "stupid" questions and people will bend over backwards to help you

-- ask specific questions and you will get specific answers

-- ask general questions and you will get general answers

-- ask lazy questions and you will get lazy answers

-- ask blanket questions and you might not get any answers at all...

 

 

The user must have a basic operating knowledge of a spreadsheet to use a spreadsheet...

beside the user's manual, there are lots of free tutorials on the web.

 

 

if you click on a cell and see formulas in it... it is not meant for input.

 

Pivots are calculated with High, Low and Close prices.

Daily Pivots are calculated with daily High, Low and Close prices.

Weekly Pivots are calculated with weeklyHigh, Low and Close prices.

Monthly Pivots are calculated with monthlyHigh, Low and Close prices.

 

Yes, simply plug in those prices and you will get your respective pivots.

 

Don't be afraid to experiment, if you ruin the spreadsheet, just download another copy.

 

My father is an old man with limited education. If he can learn computers, I am sure the people who are smart enough to trader can also.

 

 

 

enjoy!

Edited by Tams

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  artrading said:
Sorry for obviously being stupid(?) all I wanted to know was which specific cells I change as the spreadsheet is laid out with a 'summary' page but not clearly with a data entry page. I am guessing it is the middle figures between the r/s results but I thought I'd confirm. I.e. am I putting in the last hours high/low/close, yesterdays.. this weeks, last weeks?

 

Come on, give me a break - I'm not looking for a handout, just help in using the thing.

 

Why didn't you ask that then? Instead all you asked was: "Still no one giving basic guidance on how to use the spreadsheet...? Think I'm the 3rd person to ask, thanks... "

 

How would anyone be able to deduct from this what you really are looking for? If you want a specific question answered, this is would be better if you actually ask the specific question and not expect people to guess what you really are asking.

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  sevensa said:
Why didn't you ask that then? Instead all you asked was: "Still no one giving basic guidance on how to use the spreadsheet...? Think I'm the 3rd person to ask, thanks... "

 

How would anyone be able to deduct from this what you really are looking for? If you want a specific question answered, this is would be better if you actually ask the specific question and not expect people to guess what you really are asking.

 

 

Perhaps if you'd read the thread you would realize that all I was doing was following questions/posts #8 and #11 as no one seemed to have bothered themselves to help those guys. Do I really deserve a lot of snide abuse? Great forum, shame the key objective seems to be massaging your own ego's and showing off rather than helping those less experienced - whether with spreadsheets or trading in general.

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  artrading said:
Perhaps if you'd read the thread you would realize that all I was doing was following questions/posts #8 and #11 as no one seemed to have bothered themselves to help those guys. Do I really deserve a lot of snide abuse? Great forum, shame the key objective seems to be massaging your own ego's and showing off rather than helping those less experienced - whether with spreadsheets or trading in general.

 

I was only giving you helpful suggestions on how to get questions answered. The only snide remarks are yours. If you look at the posts you referenced, you'll see that they both are of the general type of "how do you use this". This is such a vague question that can have 100's of answers and you expect someone to guess what it is you really look for. Probably why they weren't answered. This is not even clear from the question if the person asking the question even know how to use Excel and I doubt many people here are interested in teaching someone how to use Excel.

 

Asking the same vague question 3 times is not going to get it answered. Specific questions might. On the other hand, insulting the forum you are asking questions in in your 4th post, is probably not going get you much help either.

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  BlowFish said:
42

 

I remember, but what was the question? ;)

 

 

Back to this off topic,

 

When I started to use forums, I tried to answer unspecific questions too.

Sometimes I have asked for more details, a better question.

Often, the second question wasn't better than the first one.

Written down in 30 s without a further thought on it.

But I have tried to help.

 

After some time I have recognized, that this questions guessing

leads to nothing but wasted time on my cost.

So that said, I avoid it now.

But sometimes a question is so strange (or a comment attached to it),

that I can't stand it; surely I will not be specific in my answer.

 

If I am able, I will answer general or specific questions.

When I read the question, I feel/see, if the writer has spent some time on it, before s/he posted it. So when s/he spent some time,

I might too.

 

And a thank you for some help, doesn't hurts.

 

I think, I have now had my ego trip with this post.

But that's how it is, if I answer, I answer because I like to do it,

while I try to avoid to waste my time.

 

Anything else was said before here by others.

Maybe my view is more how I deal with it now.

 

 

Hal

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